Desert Control AS

Report Publication Announcement • Aug 24, 2023

Desert Control releases its H1 and Q2 2023 Report and Year-to-Date Company Update

Desert Control releases its H1 and Q2 2023 Report and Year-to-Date Company Update

Desert Control concludes strategic review, initiates transition to licensed

operator model for the Middle East, delivers on target for the United States,

and obtains key regulatory approvals. The Company closes the quarter with an

outlook for significant cost reductions, improved capital efficiency, and

strengthened liquidity.

Desert Control concludes strategic review, initiates transition to licensed

operator model for the Middle East, delivers on target for the United States,

and obtains key regulatory approvals. The Company closes the quarter with an

outlook for significant cost reductions, improved capital efficiency, and

strengthened liquidity.

Q2 and First Half 2023 Highlights

Corporate

· Completed strategic review, initiating the transition to a licensed operator

model for the Middle East, unlocking cash, and reducing annual operating costs

by >NOK 15M.

· Secured NOK 10M from a private placement and an additional ?NOK 30M cash

from asset sales and licensed operator transactions (impacting H2-2023

financials).

· Achieved >2X increase in production capacity for all existing LNC production

units, significantly improving unit economics and extending the reach of

deployed CAPEX.

· Received global recognition, won sustainability and environment award at the

Entrepreneurship World Cup Global Finals, named Green Impact of the Year at

Norwegian Impact Awards, and announced Top Innovator by the World Economic Forum

and winner in the Uplink Challenge for Food Ecosystems in Arid Climates.

United States

· Secured ten new pilots in H1- 2023, delivered on target, and expanded LNC

application capabilities across various new crops and segments.

· Steadily progressing toward conversion to larger deployments. Around the end

of the year, the Company anticipates starting negotiations for the inaugural

large-scale contract.

· Obtained regulatory approval with OMRI certification in compliance with the

USDA National Organic Program for LNC in the United States.

· Achieved 30X improvement in efficiency and scalability of LNC application

since July 2022. Demonstrated further operational efficiencies, including

applying LNC through irrigation systems and streamlining the execution of pilot

projects.

Middle East

· Signed strategic licensed operator agreement for Mawarid Holding Investment

(MHI) to take full responsibility for the production, sales, and delivery of LNC

in the United Arab Emirates (UAE).

· Securing significant cost reductions by removing the need for local

subsidiaries in the UAE following the transition to the licensed operator model.

· Achieved final regulatory approval by the Ministry of Climate Change and

Environment (MOCCAE) authorizing LNC for sale and use across all sectors in the

UAE.

· Entering the Kingdom of Saudi Arabia through the signing of strategic

licensed operator agreements with H-EART.

Financial Highlights Second Quarter 2023

[second quarter 2022 in brackets]

· Revenue NOK 0,5 M [2]  [NOK 0,5 M]

· EBITDA NOK -19,5 M [NOK -20,3 M]

· Net Income NOK -18,2 M [NOK -16,8M]

· Gross R&D expenses NOK 0,3 M [NOK 0,9 M]

Financial Highlights First Half 2023

[first half 2022 in brackets]

· Revenue NOK 2,3 M [2]  [NOK1 M]

· EBITDA NOK -42,9M [NOK -43,1M]

· Net Income NOK -37,5M [NOK -40,5M]

· Gross R&D expenses NOK 0,6 M [NOK 2,9 M]

· Total cash balance 30.06.23 (bank deposits and funds) NOK 42,0 M [1]  [NOK

122,9 M]

· Equity 30.06.2023 NOK 68,0 M (equity ratio 89,6%) [NOK 150,4 (92,4%)]

[1 ]Private placement of NOK 10M by issue of 1M DSRT shares to H-EART as

strategic anchoring of the licensed operator partnership for KSA will be

reflected in the cash balance as of August 2023.

[2 ]?NOK 30M (USD 2.8M) revenues from initial licensed operator agreement

transactions and asset sales are anticipated to be recognized in H2-2023.

For more information, please contact:

Ole Kristian Sivertsen

President and Group CEO

Email: oks@desertcontrol.com

Mobile (NOR): +47 957 77 777

Mobile (USA): +1 650 643 6136

Mobile (UAE): +971 52 521 7049

Leonard Chaparian

Chief Financial Officer

Email: leonard.chaparian@desertcontrol.com

Mobile (NOR): +47 90 66 55 40

About Desert Control:

Desert Control specializes in climate-smart AgTech solutions to combat

desertification, soil degradation, and water scarcity. Its patented Liquid

Natural Clay (LNC) restores and enhances soil ecosystems to reduce water usage

and improve the efficiency of fertilizers and natural resources for agriculture,

forests, and green landscapes. LNC enables sandy and arid soil to retain water

and nutrients, thus increasing crop yields, plant health, and ecosystem

resilience while preserving water and natural resources by up to 50%.

For more about Desert Control, visit https://www.desertcontrol.com

(https://www.desertcontrol.com  )

Cautionary Note:

Disclaimer related to forward-looking statements

This release contains forward-looking information and statements relating to the

business, performance, and items that may be interpreted to impact the results

of Desert Control and/or the industry and markets in which Desert Control

operates.

Forward-looking statements are statements that are not historical facts and may

be identified by words such as "aims", "anticipates", "believes", "estimates",

"expects", "foresees", "intends", "plans", "predicts", "projects", "targets",

and similar expressions. Such forward-looking statements are based on current

expectations, estimates, and projections, reflect current views concerning

future events, and are subject to risks, uncertainties, and assumptions, and may

be subject to change without notice. Forward-looking statements are not

guaranteeing any future performance, and risks, uncertainties, and other

important factors could cause the actual business, performance, results, or the

industry and markets in which Desert Control operates in, to differ materially

from the statements expressed or implied in this release by such forward-looking

statements.

No representation is made that any of these forward-looking statements or

forecasts will come to pass or that any forecasted performance, capacities, or

results will be achieved, and you are cautioned not to place any undue reliance

on any forward-looking statements.

Q2 Report 2023

The information enclosed is subject to the disclosure requirements pursuant to

sections 5-12 in the Norwegian Securities Trading Act